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Determining factors of air passenger's choice of transfer airports in the Southeast Asia - North America market Choi, Jong Hae

Abstract

This study investigates the factors affecting air passengers’ choice of transfer airport in the market between Southeast Asia (SE Asia) and North America (NA). It estimates demand parameters and sheds lights on the business strategies for an airport operator including identifying effective routes to better compete for transfer passengers and allocate resources. More specifically, a discrete choice model is applied to estimate air travelers’ utility from choosing transfer airports in this market. Our data consists of 78 routes which represent the SE Asia - NA market. We estimate demand parameters by standard instrument-variables techniques to control for the endogeneity of airfare, while treating airport characteristics including minimum connection time (MCT), service, size, and detour degree as exogenous. Main empirical findings are: (1) Transfer passengers’ airport choice is determined by an airport’s characteristics including MCT and service quality, apart from those traditional factors such as airfares and travel time. (2) Based on estimated utility function parameters, we provide a quantitative evaluation of the transfer passengers’ willingness-to-pay for several transfer airport’s characteristics. (3) With our estimation results, a case study is conducted for Seoul Incheon International Airport. We identify the candidate route that has the greatest potential to increase the transfer passengers through the airport. This research contributes to a better understanding of air travelers’ choice of transfer airport in the SE Asia – NA market by utilizing aggregated market-level data. We identify the crucial factors that determine transfer passengers’ airport choice and estimate passengers’ willingness to-pay for airport services and characteristics. The findings of this research provide valuable insights for an airport operator to allocate resources effectively so as to attract airlines and increase transfer passengers.

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Attribution-NonCommercial-NoDerivatives 4.0 International

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